What happens if a property does not sell at auction in UK?
Published by Property Saviour
The UK's No.1 Fast House Sale Company
October 19, 2018 - Read time: 3 minutes
What happens if a property doesn’t sell at auction in the UK? Well, first of all, you’re probably going to be feeling pretty disappointed.
One of the many disadvantages of a house auction sale is the risk that your property won’t attract any interest, and fail to sell on the day.
If an auction property is not sold, there are a number of factors to consider, and we can guide you through the best potential options for a successful sale.
Let’s find out what happens if a property does not sell at auction in the UK.
What if my property doesn’t sell at auction?
Even though auction sales can be an exciting way to sell your home, they aren’t the most reliable. On average 25% of properties fail to sell at an auction house, so it’s important to be prepared for a disappointing result. Understanding the consequences of not selling at auction and having a backup plan will help avoid any unnecessary costs or further delays.
At Property Saviour, we will buy your property and complete the same within 5 to 10 days. If you are in the unfortunate position of having a property not sold at auction, you should consider giving us a call – we might be the alternative solution you need. You can read about advantages of private sale over selling property in auction here.
‘My house didn’t sell at auction – now what?’ – Why do some properties fail to sell at an auction house?
When bidding fails to reach the reserve price at a property auction, a property will be classified as “unsold”. There are a number of reasons why a property won’t sell at auction, and it’s usually because legal pack wasn’t ready in time for auction day or there was a low level of interest in the property.
If the auction house legal pack hasn’t been prepared in time for auction day, then potential buyers won’t have the vital information they need to place a bid with confidence.
Here’s what happens when a property does not sell at auction in the UK:
When important legal documents are not available for buyers to inspect, they’re likely to fear the worst and bid very low or not at all. This is one of the pitfalls of selling a house at auction. The legal pack is considered so important that some auctioneers will withdraw a property from auction if the auction legal pack is not ready before auction day – they know that without a sufficient legal pack, the property will not sell at the house auction. In some cases, an auction house will include a clause in their terms allowing them to charge sellers a withdrawal fee if the legal pack is not ready in time. So be prepared for these hidden costs.
The other main reason for a property unsold at auction is that it has not attracted a high level of interest – and that’s usually because the reserve price is too high. One of the ways auctioneers try to generate interest in a property is by setting a guide price that’s lower than the reserve price, which again, is not what you want.
What happens if a property does not sell at auction in the UK by not meeting the reserve price?
During the property auction process, if bidding fails to reach the reserve price but there has been interest in the property, the auctioneer will invite interested parties to ask questions about the property, however it is unlikely a sale will be made at this point.
If a sale cannot be concluded on auction day the property will be advertised as “unsold” and the reserve price will be revealed to the public, narrowing your chances of selling even further.
Thankfully that’s where we can help, as here at Property Saviour, we will buy your unsold auction property, eliminating all risk, and taking the weight from your shoulders.
What happens when your house IS sold at auction?
During a commercial property auction or a house auction, when a winning bid does meet the reserve and the offer is accepted, the bidder can still back out.
Once the auction has ended, the auctioneer will prepare the required documents, known as the Sale Memorandum. These documents, which detail information of the sale, must be signed by the buyer.
The buyer will now be required to pay a deposit; normally 10% of the final sale price. The remainder of the funds should be paid on completion, which usually happens within 20 working days, however don’t forget the buyer still has the right to withdraw during this time and they’ll only lose their deposit.
Can you back out of an auction bid?
If a successful bidder chooses not to pay, due to auction contract law an auctioneer has the legal right to cancel the sale and re-offering the property without a reserve. At a house auction, bidders are more hesitant to bid on property that is re-offered, as they know it’s gone unsold and it’s lost a lot of luster.
Also, it takes much longer to complete the consignment process, delaying things even more. Suddenly, a quick sale has turned into a long drag – and that’s because you can’t rely on bidders to be consistent.
Can I sell my house before auction?
When considering what happens when a property does not sell at auction in the UK, a lot of sellers become anxious as the auction day gets closer, and may also consider advertising their property elsewhere.
So, can a house be sold before auction? The short answer is yes. If the seller completes a sale during the property auction process and before the auction takes place, they can do so, however they will not be refunded by the auction house and could lose thousands of pounds.
Taking this into account, it doesn’t make sense to do both. However, just relying on an auction sale is a huge risk, and we all know private sales are not usually quick to complete.
What you can do next
Now you know what happens when a property doesn’t sell at auction in the UK, you’ll probably agree it’s not a great position for a seller to be in.
Nobody wants to buy your property, you’ve spent a lot of money, and you’re feeling unsure of what to do next.
That’s where we can help. At Property Saviour we pride ourselves in being honest, which means we’ll give you the best price for your property and complete the sale in the speed of light.
We guarantee to complete the sale in 5 to 10 working days, and we’ll even take the legal fees off your hands offering you £500 towards them. We know it’s a hassle when you want a quick sale, but we don’t want you to suffer – and we certainly don’t want you to be left disheartened at an auction.
To find out more about how we can help, get in touch here.